Unfair dismissal occurs when an employee is terminated from their job in a way that is harsh, unjust, or unreasonable. In Australia, employees who have been unfairly dismissed have the right to seek compensation or reinstatement. This compensation is intended to help the employee recover the financial losses they suffered as a result of the dismissal.
In this article, we will explore what the average payout for unfair dismissal is in Australia, including overall considerations and how a compensation payout is calculated.
Resolution By Way of The Fair Work Commission
The Fair Work Commission (FWC) is the government agency responsible for resolving disputes between employees and employers in Australia. When an employee files an unfair dismissal claim with the FWC, the Commission will consider several factors before determining an appropriate remedy, including the employee’s length of service, their age, their earnings, and the circumstances surrounding the dismissal.
The FWC has the power to order an employer to reinstate an unfairly dismissed employee, but this is a relatively rare outcome. More commonly, the FWC will award the employee compensation in the form of a monetary payout. The amount of compensation awarded will depend on a range of factors, including the employee’s earnings and the impact that the dismissal had on their financial position.
Unfair Dismissal Compensation
There is no set amount of compensation that an unfairly dismissed employee is entitled to receive in Australia. The FWC will consider each case on its merits and make a determination based on the individual circumstances of the case. However, there are some general trends and guidelines that can give employees an idea of what they might expect to receive in compensation.
Compensation Payout Cap
According to data from the FWC, the median compensation payout for unfair dismissal in Australia in 2020-2021 was $13,320. However, it’s worth noting that this figure only takes into account the cases that were heard and decided by the FWC. Many unfair dismissal claims are settled out of court, and the terms of these settlements are not publicly available.
The FWC can order up to the lesser of two amounts: either half of the employee’s yearly salary, or the compensation cap, which is $79,250 for the period of 2021-22 and is subject to change on July 1st of each year. For reference on the compensation cap, refer to the compensation for unfair dismissal as outlined by the Fair Work Commission.
It is important to remember that this is the maximum amount, and not all employees will receive this much in compensation.
Review examples of unfair dismissal cases and compensation awarded.
Ruling Considerations
Compensation for unfair dismissal can be complex. The Fair Work Commission will provide ruling with reference to section 392 Remedy Compensation within the Fair Work Act 2009.
Employee Considerations in Compensation Payout Order
In addition to the employee’s earnings, when making an order of compensation the FWC will consider other factors when determining the amount of compensation to be awarded. For example, employment, any influence of harassment or discrimination, and length of employment.
Employment
The Fair Work Commission will in dome cases take into consideration whether the employee was able to find alternative employment quickly after their dismissal. Employees may receive a lower payout than someone who was unable to find work for an extended period.
Harassment and Discrimination
Similarly, to the above, if the employee was unfairly dismissed in a particularly egregious manner, such as being subjected to harassment or discrimination, they may receive a higher payout than someone who was dismissed for less serious reasons.
Length of Employment
Another important factor that can impact the amount of compensation awarded is the length of the employee’s service with the employer. In general, employees who have worked for their employer for a longer period of time will be entitled to a higher payout than those who have only been with the company for a short time. This is because longer-serving employees are likely to have built up a greater level of job security and may find it more difficult to find alternative employment.
Small Business and Unfair Dismissal Compensation
It’s also worth noting that employees who were employed by a small business (defined as having fewer than 15 employees) at the time of their dismissal may be entitled to a lower amount of compensation than those who were employed by a larger business. This is because small businesses are subject to different rules and regulations than larger businesses.
For more on compensation payable with relation to small businesses, refer to the rules for small business owners as outlined by the FWC.
Key Takeaway
In summary, the average payout for unfair dismissal in Australia is around $13,320, but this figure can vary widely depending on the individual circumstances and the Fair Work Commissions ruling in alignment with the Fair Work Act 2009.
It’s important to note that you have 21 days from the date in which you were dismissed to make a claim for unfair dismissal with the Fair Work Commission. For support with your claim for compensation get in touch with the team here at AWDR, we’d love to hear from you.
Note that AWDR are not lawyers. Our team are workplace experts and can assist you with an unfair dismissal claim against your employer.
